FCB secures US$90 million for key sectors of economy
Senior Business Reporter
First Capital Bank (FCB) says it is targeting to secure lines of credit worth US$90 million from offshore funders for on-lending to key sectors of the economy.
In addition, FCB has initiated a process to migrate to the US Dollar denominated stock exchange, the Victoria Falls Stock Exchange (VFEX) to position the Bank for extended options for capital raising in foreign currency.
FCB managing director Mr Ciaran McSharry told at an analyst briefing for the year ended December 31, 2022 on Monday that demand for US dollar loans increased significantly during the year under review.
“We are increasing our focus on foreign currency-denominated business supported by own deposits, lines of credit and offshore facilities, targeting lines of credit of US$90 million from four offshore funders,” he said.
The funding opportunity aims to accelerate economic growth in pertinent industries through employment creation, commerce upliftment and promotion of environmentally responsible businesses for organisations that meet the qualifying criteria.
Mr McSharry said apart from the European Investment Bank, the Bank is also working with the Afreximbank.
“Therefore, we are looking for more banks for credit lines for on lending to key sectors of the economy,” he said.
In June last year, FCB in partnership with the European Investment Bank secured a developmental line of credit to the tune of EUR 12,5 million. The funding was set to develop eligible investment projects undertaken by Small to Medium Enterprises (SMEs) and MidCap companies under First Capital Bank locally.
Meanwhile, during the year under review, the bank’s lending to the agricultural sector grew to 21 percent of the total portfolio, up from 16 percent in 2021. Mr McSharry said the bank developed partnerships with key development financial institutions leading to total lines of credit amounting to US$48 million during the year under review.
He said deepening market intensity in underlying business leveraging digital capabilities and robust relationship management.
“The bank increased investment in physical assets, acquisition of banking properties, and construction of the new head office. At the same time, we increased investment in foreign currency-denominated short-term instruments such as gold coins,” said Mr McSharry.
For the year under review, Mr Fanuel Kapanje, the finance director said despite the tough operating environment, the bank was able to make a profit, albeit lower than prior year, showing some level of resilience.
He said profit after tax was 27 percent lower at $8,4 billion compared to $11,6 billion in 2021 with the reduction as a result of a number of things such as the lower outturn posted in the profit and loss on account of revaluation of the investment portfolio in 2022 compared to 2021.
“Looking at key elements of operations, we posted real growth in terms of net interest income of 37 percent to $12,64 billion and on non-interest income positive growth of 44 percent at $24,06 billion and that is explained by the macro-economic environment, particularly as that affected liquidity in the economy,” he said.
The bank’s total income for the year was $39,7 billion compared to $31,2 billion in 2021. Local currency income accounted for 56 percent of total income while foreign currency income accounted for 37 percent.
“Transactional income remained largely local currency denominated reflecting the general skewness of retail transactions in the formal sector,.
Mr Kapanje said yields on the growing foreign currency book moderated the steep hike in ZW$ interest rates resulting in an overall portfolio yield of 31 percent.
The group witnessed an increase in operating expenses by 37 percent, with cash expenses in the number increasing by 49 percent.
Mr McSharry said the bank has been growing its consumer lending business and increasing physical presence of banking operations in high-potential locations in the retail market.
“Current expansion initiatives include increasing the number of point-of-sale machines and host-to-host integration,” he said.
He added that the Bank is also onboarding a wider range of money transfer agents and will put additional billers on various platforms.